UOB delivered net earnings of S$739m, down 6% YoY or 7% QoQ , slightly better than market expectations of S$730m based on a Bloomberg poll. This led to full year earnings of S$3096m, down 3.5%.

Unlike its peers which saw increases in allowances for the last quarter, UOB bucked the trend with a decline from S$190m in 4Q15 and S$185m in 3Q16 to S$131m in 4Q16.

Specific allowances actually went up from S$288m in 3Q16 to S$428m, however, total allowances dropped largely due to a release in general allowance of S$310m. NPL ratio also fell from 1.6% in 3Q16 to 1.5% in 4Q16. Net Interest Margin (NIM) held steady from the previous quarter at 1.69%.

Management has declared a final dividend of 35 cents, bringing full year dividend payout to 70 cents.

Prior to its results, we have a HOLD on the stock. We will provide more updates after the analysts’ briefing later this morning.

Source: OCBC Research - 17 Feb 2017